Learn about the Microsoft Dynamics 365 Finance Insights Capabilities – Cash Position (Part 2 of 5)

Microsoft Dynamics 365 Finance Insights is helpful because it offers configurable and extensible solutions for predicting cash flow, receivable payments, and generating budget proposals, as well as the ability to use machine learning templates to build models with the data you provide. In this blog, we will cover the cash position capability in Finance Insights. This is the second blog of a 5-part series covering different Finance Insights capabilities. Check out the first blog here.

For businesses, managing cash flow is crucial to ensure a steady stream of income to cover expenses and investments. Dynamics 365 Finance Insights offers a Cash Position feature that projects the near-term cash flow by estimating customer cash receipts and the cash disbursements to vendors. By using this feature, businesses can forecast their cash flow more accurately, which can help them plan their future investments and expenses effectively. This blog will explore the basics of the cash position capability in Dynamics 365 Finance Insights.

When forecasting customer payments, the system leverages the predictions from the customer payment prediction tool. In the absence of such predictions, the typical duration to process a customer invoice into a payment is utilized to determine a payment date. The system establishes the invoice date for ongoing customer orders based on the mean number of days required for each customer’s order lines to be invoiced. This invoice date then serves as data for the payment prediction mechanism, which determines a payment date for every order line.

The payment date for pending invoices is derived from these predictions, choosing a date that aligns with the fiftieth percentile of the cumulative distribution function sourced from the projected probability buckets.

A parallel method is employed for anticipating vendor payments. The system determines the standard time for every vendor to transform a vendor invoice into a payment. This duration then informs the projected payment date. The system ascertains the invoice date for active vendor orders by evaluating the average timeframe needed to turn order lines into invoices for each vendor. Following that, the payment date is derived based on the average duration to process a vendor’s invoice to a payment.

The primary segment of the Cash position tab displays a graph representing cash inflows, outflows, and their influence on the complete liquidity balance. This cash position visualization can be observed daily, weekly, monthly, or quarterly. Selecting Daily allows a 21-day forecast, Weekly offers a 20-week view, Monthly provides a 12-month outlook, and Quarterly gives a 12-quarter perspective. This chart can be concealed if you need more screen space for other content within the Cash position tab.

The secondary part of the Cash position tab illustrates specifics about position, cash movement, expected payments, and bank details.

Data in the Position details segment is organized into three parts: a compilation of liquidity accounts, documents contributing to cash inflows, and documents leading to cash outflows. Additionally, it presents cash position figures. The liquidity account balance is the starting balance for the initial period viewed. These balances are computed in subsequent periods by adding inflows and deducting outflows from preceding times. To inspect transaction specifics forming this balance, click on the Balance hyperlink.

The Cash flow segment reveals aggregated cash inflows and outflows per period and their effect on liquidity balances. Initially, the liquidity account shows the starting balance, but in later periods, it’s updated based on inflows and outflows from the past.

The Projected bank balance section forecasts cash outflows and their influence on liquidity balances, while the Bank account area displays the expected cash flow impacts on bank balances.

To preserve and modify the cash position view, take a snapshot.

Delving into Cash Position Features:

1. The Cash position tool visualizes cash flow from system documents and external data imports.
2. Integration of external cash flow data into Dynamics 365 Finance is streamlined, and compatibility with the data import-export structure facilitates integration with Excel OData. Multiple data sources can be merged for a holistic cash position solution.
3. It introduces a smart cash positioning system, formulating predictions based on customer payment habits, aiding companies in anticipating cash inflow timings.
4. AI-powered customer payment prediction analyzes past payment trends to estimate payment dates for customer transactions.
5. For vendor transactions, the time span between order dispatch, invoicing, and payment processing is used to forecast cash outflow timings, enhancing accuracy.

This results in a precise cash flow outlook anchored on historical payment patterns for financial stewards.

Stay engaged for the third installment of our five-part exploration!

Next Steps

If you are interested in learning more about how to use Microsoft Dynamics 365 Finance Insights, contact us here to find out how we can help you grow your business. You can also email us at info@loganconsulting.com or call (312) 345-8817.